Discharge by Lapse of Time
A contract is discharged if it is not performed or enforced within a specified period, called period of limitation. The Limitation Act, 1963 has prescribed the different periods for different contracts, e.g. period of limitation for exercising right to recover a debt is 3 years, and to recover an immovable property is 12 years. The contractual parties cannot exercise their rights after the expiry of period of limitation.
Example On 1st July, 2001 X sold goods to Y for Rs 1,00,000 and Y has made no payment till Aug. 2004. State the legal position as on 1st Aug. 2004 if no credit period was allowed (b) if 2 months credit period was allowed.
Case (a) The contract is discharged by lapse of time (i.e. 3 years) from 1st July 2001 because the debt has become time barred and hence X cannot exercise his right to recover this debt.
Case (b) The contract is not discharged by lapse of time because the period of limitation is yet to expire on 31st Aug. 2004 (3 years from the expiry of the credit period)
Discharge by Breach of Contract
A contract is said to be discharged by breach of contract if any party to the contract refuses or fails to perform his part of the contract or by his act makes it impossible to perform his obligation under the contract. A breach of contract may occur in the following two ways:
(a) Anticipatory Breach of Contract Anticipatory breach of contract occurs when party declares his intention of not performing the contract before the performance is due.
(b) Actual Breach of Contract Actual breach of contract occurs in the follow-ing two ways:
(i) On Due Date of Performance: If any party to a contract refuses or fails to perform his part of the contract at the time fixed for performance, it is called an actual breach of contract on due date of performance.
During the Course of Performance: If any party has performed a part of the contract and then refuses or fails to perform the remaining part of the contract, it is called an actual breach of contract during the course of performance.
Consequences of Breach of Contract
The aggrieved party (i.e. the party not at fault) is discharged from his obligation and gets rights to proceed against the party at fault. The various remedies available to an aggrieved party will be discussed later in detail.
A contract is discharged if it is not performed or enforced within a specified period, called period of limitation. The Limitation Act, 1963 has prescribed the different periods for different contracts, e.g. period of limitation for exercising right to recover a debt is 3 years, and to recover an immovable property is 12 years. The contractual parties cannot exercise their rights after the expiry of period of limitation.
Example On 1st July, 2001 X sold goods to Y for Rs 1,00,000 and Y has made no payment till Aug. 2004. State the legal position as on 1st Aug. 2004 if no credit period was allowed (b) if 2 months credit period was allowed.
Case (a) The contract is discharged by lapse of time (i.e. 3 years) from 1st July 2001 because the debt has become time barred and hence X cannot exercise his right to recover this debt.
Case (b) The contract is not discharged by lapse of time because the period of limitation is yet to expire on 31st Aug. 2004 (3 years from the expiry of the credit period)
Discharge by Breach of Contract
A contract is said to be discharged by breach of contract if any party to the contract refuses or fails to perform his part of the contract or by his act makes it impossible to perform his obligation under the contract. A breach of contract may occur in the following two ways:
(a) Anticipatory Breach of Contract Anticipatory breach of contract occurs when party declares his intention of not performing the contract before the performance is due.
(b) Actual Breach of Contract Actual breach of contract occurs in the follow-ing two ways:
(i) On Due Date of Performance: If any party to a contract refuses or fails to perform his part of the contract at the time fixed for performance, it is called an actual breach of contract on due date of performance.
During the Course of Performance: If any party has performed a part of the contract and then refuses or fails to perform the remaining part of the contract, it is called an actual breach of contract during the course of performance.
Consequences of Breach of Contract
The aggrieved party (i.e. the party not at fault) is discharged from his obligation and gets rights to proceed against the party at fault. The various remedies available to an aggrieved party will be discussed later in detail.
How contract may be discharged by Breach of Contract?
![How contract may be discharged by Breach of Contract?]()
Reviewed by Hosne
on
9:22 AM
Rating:
